BACK TO BASICS IN EXPLORATION
Novo Resources Corp. (TSX:NVO,OTCQX:NSRPF) is a Canadian listed company with gold
production and exploration assets in the Pilbara region of Western Australia and near Kirkland
Lake’s Fosterville mine in Victoria, Australia. Its Nullagine Gold Project has paused production
awaiting the outcome of a revised Feasibility Study and mine extension approvals. It has a
approximately 10,500 square kilometre exploration tenement under active exploration.
KEY POINTS
Strong drilling program underway – At its core, Novo has strong exploration DNA with a
quality exploration team backed by a supportive Board and a strong balance sheet. The company
and its shareholders have endured a period of sustained negative news as the plan to generate
cash from mining the Beatons Creek oxide was unsuccessful, and the conglomerate nuggets
story has not advanced. The company is pivoting to an exploration focus for now which should
see an end to the negative news flow and potentially the start of a period of positive news.
The Becher target has the most company changing potential near term - Drilling has
started on the Becher target which has geology appearing to mirror that containing the 8.5Moz
Hemi discovery of De Grey 30Km away. An initial program is underway comprising over
30,000m of air core drilling (Hemi discovery holes were also air core). Hemi is a new style of
target that had not been explored for previously in this region. The results of this drilling are
starting to flow into the market and appear to be very encouraging without as yet a Hemi style
discovery hole. The best intersection to date is 20m at 0.67g/t gold from surface.
Awaiting assays from Karratha Drilling – The company has also been active in its Purdy’s
North tenement which is sandwiched between Artemis’ Carlow Castle and Azure/Creasy’s
Andover discoveries. Novo is drilling gold/copper and also nickel/cobalt targets. Battery metals
are not the company’s focus, but given the success enjoyed by its close neighbours in recent
times, it makes sense to work up the ground, even if only to on-sell to others. The value
currently ascribed by the market to the neighbours’ discoveries is A$140M.
Nullagine Gold Project Beatons Creek Feasibility Study is currently due in March 2023
quarter – Confirming the economics of the Nullagine Gold Project is the company’s lowest
risk pathway to share price improvement. The infill drilling program at Beatons Creek is in
its final stage, with a new Resource update due in November 2022 with a further update in
March 2023 and potentially a maiden Reserve and feasibility study by the end of March 2023.
Exploration drilling is ongoing in the Mosquito Creek Basin along from the company’s 1.5Mtpa
Golden Eagle processing plant and has the potential to contribute additional ounces. Given the
issues with mining of the oxide ore at Beatons Creek, some reduction relative to the 2021 PEA
is likely. The size distribution of oxide gold deposits in the Mosquito Creek Basin suggests that
any discovery is likely to be 10-40Koz, and there is excellent potential for a number of such
discoveries. The previous owner of the Golden Eagle plant operated for over five years mining
portfolios of small deposits. There is potential for larger discoveries in the relatively unexplored
Novo sections of the Mosquito Creek Basin to the east and north, all within trucking distance
of the plant.
Applying a new model to Victorian gold exploration – At the Malmsbury joint venture,
Novo has drilled what may be an Intrusion Related Gold System with the Missing Link Granite
running 0.26g/t gold over 79.9m. Exploring a historical Victorian gold field for Intrusion Related
Gold Systems is a new concept now being pioneered by Novo. However, larger scale Fosterville
targets remain the overarching goal.
Strong balance sheet – Novo has repaid the US$40M Sprott debt and is now debt free, with
C$65.3M cash on hand at 30 September 2022.
Potentially saleable assets – In addition to C$20.5M in share investments, the entrepreneurial
side of Novo’s exploration is generating targets that are non-core and could be sold for cash or
shares to create shareholder value and provide cash to fund exploration. These assets include